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By Nick Wakeman

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Nick Wakeman

Boeing's Air Force protest raises questions about competition

Boeing’s protest of an Air Force contract with L3 Technologies is raising some interesting questions about the role of competition and the power of the incumbent.

For at least 15 years, L3 has supported the EC-130H Compass Call fleet of electronic warfare aircraft. The Air Force wants to replace the aircraft and upgrade the systems. It tapped L3 for the job.

The company would work on the electronics and recommend what aircraft to put it on.

That’s when Boeing called foul.

Obviously, Boeing wants to build the aircraft as well as be the integrator of the systems. They claim in published reports that L3 has a track record of working with Gulfstream and Northrop Grumman on military aircraft programs, so the likelihood of L3 picking a Boeing airplane is low.

The kicker and what sticks in Boeing’s craw is that the Air Force picked L3 without competition. The Air Force went with L3 because of their long history on the program, the need for speed and that the systems are highly classified and L3 is so familiar with them, according to testimony at a House Armed Service Committee,

There were some questions at the hearing about L3’s role as a lead systems integrator or just a systems integrator. A lead systems integrator has a higher level of authority and even some autonomy. With that in mind, the Air Force was careful to make sure the committee understood that L3 was a systems integrator and the branch would have final say on major decisions.

In earlier statements, the Air Force called L3 an LSI but Lt. Gen. Arnold Bunch Jr. told the committee that he had misspoken earlier.

But what I find most interesting about Boeing’s protest is the questions it raises about competition: when it is appropriate and when it isn’t.

Speed and familiarity seem to be the main motivators for the Air Force but that kind of rings hollow to me when you consider that this is a program that will stretch out for decades.

L3 has an advantage as an incumbent that the customer obviously holds in high regard, so why not hold a competition?

The Government Accountability Office will look at issues around the laws and regulations and whether Air Force acted reasonably. Boeing is citing requirements in the 2017 National Defense Authorization Act but I read the part about Compass Call and I think it can be argued for both sides. While they mention competition, it doesn’t sound like a requirement but more a nice thing to have.

We’ll have to wait for GAO’s decision to see if the Air Force flew too high on this and whether there will be broader implications.

Posted by Nick Wakeman on May 26, 2017 at 9:36 AM

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